It’s a perennial question, so let’s talk about it again . . . How do you set your rates? (This is a topic we also discuss at length in the Coaching Program, which starts October 5, 2015.)

When I first started freelancing, I never knew what to charge. After a year or two, however, I learned how long it would take me to do various kinds of work and to gauge how easy or difficult a client would be to work with.

I created a matrix that I would use to estimate project fees for clients. The matrix was something for my own purposes — I did not show it to clients. It gave me an easy place to start, and then I could adjust from there.

For example, it’s common for consultants to include what I call a PITA Surcharge (or “pain in the ass” fee) of an additional 10-30% when estimating for certain clients! Of course, you don’t openly discuss this with most of your clients; it’s just part of your own calculations. (I have discussed this openly with long-standing clients who are self-aware enough to know when certain projects are going to require a ridiculous number of drafts because of certain personalities involved. But that’s rare.)

Here’s the rate card I personally used to use to estimate writing jobs. You’ll see the two main factors were how hard the job would be (which affects the speed with which I could write, a rate I calculated for myself after carefully tracking time on many projects) and how much I thought the work was worth on an hourly basis.

The type of work (e.g., annual report versus press release) and the client (e.g., small versus large) influenced which hourly rate I used. Again, I did not actually give the client the hourly rate. I just used it to estimate the project fee, which is what I gave to the client as the estimate.

I don’t use this anymore, because I don’t do this kind of work anymore. I am not suggesting you use this chart or these fees; I am suggesting that you create your own kind of tool!

What’s your favorite way to structure your fees for your nonprofit clients? How do you calculate estimates for your clients? Please share in the comments.

Oftentimes, this conversation with nonprofit clients quickly devolves into how long it will take you, and what your hourly rate is.

This is, in my experience, the worst possible way to have a conversation with a client about the value of your services.

If the conversation is going there, pull up. Instead, what you want to do is focus on the problem you are solving or the opportunity you are creating, and most importantly, the cost to the nonprofit of NOT solving that problem or of skipping that opportunity.

It’s only when you are talking in these terms that both you and your clients can see the true value of your services.

Maybe your fee to help rewrite their year-end fundraising materials seems expensive . . . until they consider that their materials are raising less and less each year, and that they must get back on track or lay off staff.

Maybe your fee to help get board members engaged in the organization’s work seem expensive . . . until they consider how much more productive the board would be with some training, and how staff would no longer despise working with the board.

Maybe your fee to coach a team to learn content marketing skills seems expensive . . . until they realize you are teaching not just communications skills, but new ways to deliver programming that better achieves the organization’s mission, instead of continuing to be ignored by the people they claim to serve.

It’s in both of your interests to look at the consulting relationship in this way.

Know your value, and the costs to your prospective clients of missing out on that value, and market THAT. Not your time.

How much should I charge? It’s the first question that new freelancers or consultants ask. And the truth is, the question never goes away. You’ll always encounter new projects, new clients, and new twists that demand adjustments to your rate schedule.

First let’s look at the big picture. How do you view the work that you charge for?

As a commodity. If you charge by the word, or by the page, you are treating words like a commodity. It’s sort of like a drive-through business model.

As a skill. If you charge by the hour, you are treating your abilities like a trade. It’s akin to a plumber or electrician. Yes, you can fiddle with your leaking pipes, but the job will get done faster and better if you hire a pro. It’s the same with planning, writing, design, or whatever you offer. Everyone can do it at some level, but most people don’t do it very well. They need someone with skills — you! If you believe this is the right mindset for you, I recommend that you see how much beginning plumbers or electricians charge in your community. Use that as a baseline for your hourly rate and adjust from there.

If you charge primarily by the hour, however, you end up penalizing yourself for getting better and faster at the work you do. Let’s see, you produce a better product in less time, and you get paid less? That’s crazy! At the same time, knowing your hourly rate, even if you never share it with clients, can help you estimate project fees.

As a professional service. If you charge by the project, you are treating what you do like a professional service, much like a doctor. You aren’t billed by the minute when you get a check-up; you are billed for the service, regardless if it takes 5 or 50 minutes. The outcome, not the time spent on it, is what matters.

In most cases, I believe this approach works best. Clients like it because they know the bottom line, which is especially important for nonprofits. You know the bottom line, too. If you work quickly, you can make more than your typical hourly rate. If you work slowly, you may lose money. In other words, your success with project fees depends entirely on your ability to estimate accurately. You need well-defined projects and you need to know yourself and how long it will really take you to produce the work.

If a project is not well-defined, or you believe it’s likely that you will be asked to produce additional drafts, you can incorporate an hourly rate into a project fee and specify in the contract when the hourly rate kicks in.

Here’s the truth: I didn’t really start to make what I consider “real money” — not living month to month — until I moved exclusively to project fees.

Many people will suggest that writing or consulting for nonprofits as a volunteer is a good way to build a portfolio and client list.

But instead of positioning yourself that way, I suggest that you write or consult for a reduced rate or make it clear that you are donating your services as a professional freelance writer or consultant.

By framing the relationship this way, it is clear to the nonprofit that you are a professional who normally expects payment for services. Asking for payment on future projects will be much easier with this kind of relationship in place.

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Need to know how to create content for your nonprofit clients, like writing a nonprofit annual report or email newsletter? Or putting together an editorial calendar for them? We cover these topics, and many, many more at Nonprofit Marketing Guide.com

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Nonprofit Marketing Training

Need to know how to create content for your nonprofit clients, like writing a nonprofit annual report or email newsletter? Or putting together an editorial calendar for them? We cover these topics, and many, many more at Nonprofit Marketing Guide.com